Holcim says no price cut despite plant reopening

Holcim says no price cut despite plant reopening
06 July 2010

The local Philippine unit of Holcim Ltd. yesterday said it would keep cement prices at their recently hiked levels even as the firm expects to revive next month a production line that can churn out cheaper clinker.

Profits of Holcim Philippines, Inc. rose by 76.5% to PHP1.4bn in the first quarter. There will be no price rollbacks since the firm will still be using costlier imported clinker, Eduardo A. Sahagun, Holcim Philippines, Inc. senior vice-president for sales, said in a telephone interview.

Late last month, the company -- which claims to have a third of the market -- increased cement prices by 2% to 4% in Metro Manila and Southern Luzon as the power crisis in Mindanao raised production costs in its Davao and Misamis Oriental plants.

Aside from a 42% hike in power bills, the company had to import 140,000t of clinker which is costlier by roughly a third of what its mothballed Mindanao plants could have produced if power supplies were stable, earlier reports said.

Next month, however, the firm expects to have revived one line at its Lugait, Misamis Oriental plant, which can make clinker now that power supply in the region has become more reliable, Mr. Sahagun said.

“But even if we operate it this year, the [pricier] imported clinker will still be coming in. There was a contract so imports will keep arriving,” Mr. Sahagun said.

The company will also continue getting imported clinker as it expects to shutter a few plants for routine maintenance, Mr. Sahagun added.

 On top of the cost of imported clinker, higher power costs in Mindanao also prevent the company from rolling back cement prices, Mr. Sahagun said.

“That is why price reduction is not contemplated,” he said, noting however that the most recent price increase should be the last for the year.

The firm posted a 17% growth in first-quarter sales to P6.4bn, slower than the 27% growth recorded in the same quarter last year. 

Published under Cement News